Value Creation: Petroleum Economics and Fiscal Regimes Training Course

Introduction

The global petroleum industry operates within a highly dynamic and capital-intensive environment, where investment decisions, project viability, and profitability are profoundly shaped by economic principles and the specific fiscal regimes imposed by host governments. Understanding how oil and gas projects are valued, the various costs involved, and how government takes (royalties, taxes, production shares) impact financial returns is paramount for companies seeking to explore, develop, and produce hydrocarbons, as well as for governments aiming to maximize national benefits from their resources.

This intensive training course is meticulously designed to equip participants with a comprehensive and practical understanding of petroleum economics and the intricacies of various fiscal regimes. From exploring fundamental economic concepts and investment appraisal methodologies to mastering the analysis of different petroleum contract types, risk assessment, and project valuation techniques, you will gain the expertise to make informed financial and strategic decisions. This empowers you to optimize project portfolios, negotiate favorable terms, manage financial risks, and strategically contribute to the economic success and sustainable development of oil and gas ventures.

Target Audience

  • Commercial Managers and Analysts in Oil & Gas.
  • Business Development Professionals.
  • Financial Analysts and Investment Professionals.
  • Project Managers and Project Engineers.
  • Government Officials from Ministries of Energy, Finance, and Regulatory Bodies.
  • Petroleum Engineers and Geoscientists interested in Economics.
  • Legal Counsel involved in Petroleum Agreements.
  • Senior Management and Executives in Oil & Gas Companies.

Duration: 10 days

Course Objectives

Upon completion of this training course, participants will be able to:

  • Understand the fundamental economic principles applied in the petroleum industry.
  • Grasp various investment appraisal methodologies for oil and gas projects.
  • Analyze different types of petroleum fiscal regimes and their impact on profitability.
  • Comprehend the concepts of crude oil and natural gas pricing and market dynamics.
  • Evaluate project risks and uncertainties from an economic perspective.
  • Develop practical skills in conducting economic evaluations and financial modeling.
  • Navigate the complexities of government take and revenue sharing mechanisms.
  • Formulate robust strategies for optimizing project economics and negotiating favorable terms.

Course Content

  1. Introduction to Petroleum Economics
  • Overview of the oil and gas value chain from an economic perspective.
  • Key economic drivers and challenges in the petroleum industry.
  • Concept of value creation and profitability in oil and gas projects.
  • Time value of money and its application.
  • Introduction to economic evaluation metrics.
  1. Investment Appraisal Methodologies
  • Discounted Cash Flow (DCF) analysis.
  • Net Present Value (NPV): calculation, interpretation, decision rule.
  • Internal Rate of Return (IRR): calculation, interpretation, limitations.
  • Payback Period and Discounted Payback Period.
  • Profitability Index (PI).
  • Comparing and selecting projects using economic indicators.
  1. Cost Analysis in Petroleum Projects
  • Types of costs: Capital Expenditure (CAPEX), Operating Expenditure (OPEX).
  • Exploration costs: seismic, drilling.
  • Development costs: wells, facilities, infrastructure.
  • Production costs: lifting costs, transportation.
  • Decommissioning costs.
  • Cost estimation techniques.
  1. Petroleum Fiscal Regimes - Overview
  • Definition of fiscal regime: how governments collect revenue from oil and gas.
  • Objectives of fiscal regimes for governments and companies.
  • Evolution of fiscal regimes globally.
  • Key components of a fiscal regime: royalties, taxes, production sharing, bonuses.
  • Impact of fiscal stability and changes on investment decisions.
  1. Concessionary / Royalty-Tax Systems
  • Principles of royalty-tax systems: government grants rights for royalties and taxes.
  • Types of royalties: ad valorem, specific, sliding scale.
  • Corporate income tax and other direct taxes.
  • Depreciation, amortization, and depletion allowances.
  • Advantages and disadvantages of royalty-tax systems.
  1. Production Sharing Contracts (PSCs)
  • Principles of PSCs: government owns resources, company acts as contractor.
  • Cost oil/gas: recovery of exploration and development costs.
  • Profit oil/gas: sharing of remaining production between government and company.
  • R-factor and other progressivity mechanisms.
  • Advantages and disadvantages of PSCs.
  1. Service Contracts and Other Fiscal Models
  • Technical Service Agreements (TSAs) and Risk Service Agreements (RSAs).
  • Hybrid fiscal regimes.
  • Joint Ventures and their fiscal implications.
  • Special petroleum taxes and windfall taxes.
  • State participation and carried interest.
  1. Risk and Uncertainty in Petroleum Economics
  • Types of risks in oil and gas projects: geological, technical, commercial, political, environmental.
  • Probabilistic analysis and Monte Carlo simulation.
  • Sensitivity analysis and scenario planning.
  • Decision trees for evaluating uncertain outcomes.
  • Managing and mitigating economic risks.
  1. Crude Oil and Natural Gas Pricing
  • Global crude oil benchmarks (e.g., Brent, WTI, Dubai).
  • Factors influencing crude oil prices: supply, demand, geopolitics, speculation.
  • Natural gas pricing mechanisms: oil-indexed, hub pricing, LNG spot market.
  • Price volatility and hedging strategies.
  • Impact of pricing on project economics.
  1. Economic Modeling and Negotiation Strategies
  • Building simple economic models for oil and gas projects.
  • Analyzing the government take and investor returns.
  • Key parameters for negotiation: fiscal terms, work program, local content.
  • Preparing for fiscal negotiations.
  • Case studies in petroleum fiscal regime analysis and negotiation.
  • Impact of energy transition on petroleum economics.

CERTIFICATION

  • Upon successful completion of this training, participants will be issued with Macskills Training and Development Institute Certificate

TRAINING VENUE

  • Training will be held at Macskills Training Centre. We also tailor make the training upon request at different locations across the world.

AIRPORT PICK UP AND ACCOMMODATION

  • Airport pick up and accommodation is arranged upon request

TERMS OF PAYMENT

Payment should be made to Macskills Development Institute bank account before the start of the training and receipts sent to info@macskillsdevelopment.com

For More Details call: +254-114-087-180

 

 

Value Creation: Petroleum Economics And Fiscal Regimes Training Course in Nigeria
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